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Sunday, April 29, 2012

Dubainomics

Speeding
along the roads of Dubai, looking at the tall skyscrapers, I couldn’t help but
think: Is it really the heaven it is portrayed to be? Are people really as
happy as they look? Or is there another side to this apparently blissful
emirate?

Contrary
to popular expectation, I will not be talking about burkha-clad women in this series…well,
at least I don’t plan to. This particular post looks deeper into the economics
of Dubai… what makes it thrive? What makes it survive?

The
emirate has a constitutional monarchy with Sheikh Mohammed bin Rashid Al
Maktoum as the King/ Monarch. Al Maktoum is the name of the ruling family.
Dubai has an executive council which works independently of the Supreme council
of the UAE. Have you ever wondered how people are happy in a monarchy? I mean
these are modern times we are living in. Do they not realize the benefits of a
democracy? What benefits are they getting under the present system?

Talking to
the locals gave me some insight. But there was a world of difference in the
opinions of a registered UAE national and the others. A UAE national is
provided with various facilities. They are provided with free education and
guaranteed jobs. Some even hinted that they are gifted a house and a car by the
government when they marry (this last detail could not be verified). They have to pay no taxes and in times of financial
crunch, the government comes forward to help them. The world-class facilities
provided are there for all to see. If you live in India and have never been
abroad, your eyes will probably pop out when I tell you that there are
absolutely no traffic jams there…the cars run at 120kmph…the roads are
super-good and for a change, people obey the traffic rules (the life of a
pedestrian is way easier there!).

The ‘others’
category primarily includes workers from the Asian subcontinent or the professionals
who came to Dubai after they stopped awarding new citizenships. For these
people, the state provides minimal benefits. The birth of a child is roughly a
Dh 50,000 affair (1Dh=INR14). Then add to it the cost of his/her education,
your daily expenditures, house rents and office rents. The costs rocket through
the sky. For them it is often a struggle to make the ends meet. Yet they are
still satisfied. Why? Because Dubai provides them with a safe society, safer
than their home countries will ever be. This emirate has a crime rate of less
than 1%. There are virtually no kidnappings and murders, petty thefts, if any,
are reported and the culprits brought to book.

Even the
economic policies are strictly pro-Emiratis. Like I said earlier, there is no
Income Tax, no Customs Duties which needs to be paid. There are certain other
provisions as well. Eg: if a non- emirate national has to setup a new business
in Dubai, he needs to do it with local sponsorship. In effect, it means that
they have to take up a local partner whose share will be 51% of the company
stocks. Isn’t that really pro-citizen? Though the profits and losses can be
divided unequally, but you will always have that one Arab voice on your board. For
100% ownership, you need to setup your company in the free zones. But then you
are restricted from doing business with the local companies. Your access is
limited to the international traders and businessmen because you cannot work
outside the free zone. Compare and contrast this with our country. Can any such
reform ever come up here? Even if it does, who will benefit from it?

So where
does the government’s income come from? Does the Sheikh spend his own money?

As far
as the printed word goes, Dubai’s income comes primarily from trade and
tourism. They have some of the largest and the best malls in the world. They have
developed amazing water parks and game arenas. Their airlines is at par with
the best in the world. Every year, millions of tourists flock to the place. They
use state-owned facilities like hotels, metro, hospitals thus, contributing to
their revenue. Because Dubai is a free economy, even Indians have invested
millions of rupees in its economy. If we were to pull out all our money, Dubai’s
economy would probably crumble. True, India is a rich country, Indians are not.

Another source
of income are the taxes the followers of Islam have to pay, namely, Zakat. It is
a form of charity which every well-off Muslim is expected to do. The Ruling
family has made some of the largest donations in the history of the world. The zakat
collections go upwards of Dh 60 million. This fund is used for the welfare of
the poor people. However, descendants of Muhammad cannot receive money from
this fund.

All this
has reduced the dependency on Oil as a source of income. It now accounts for
less than 6% of the GDP. The efforts to diversify the economy have indeed paid
off.

Dubai is
a story of contradictions, a unique blend of the traditional and the modern. People
do gossip about their rulers but they also worship him like God. The Sheikhs
have indeed done a lot for the people. Else why isn’t there civil unrest? Why isn’t
there any crime? They build the tallest buildings in the world, yet still
preserve the homes of their ancestors. Like any other country in the world,
Dubai also has its share of good and bad, pros and cons. Just that the pros
seem to outweigh the cons.

It inspires
others to achieve new heights…to break free from the conventional yet have your
feet firmly planted on the ground... anyone heard of the Dubai-inspired ‘future’
city in Bihar?

About Me

At first look, I'm extremely normal. Well, I look the same at second look too! (They tell me I don't even look like an engineer!) I love each moment that life offers me, and the people it is filled with. Taking one day at a time, I believe in giving my best. A dreamer at heart, I hope my humble, non-important opinion can someday make even a grain of a difference in someone's life. Till then, it's me and you and our world of words!